What’s for Dinner?

Starting a new company is always a fraught affair. Starting a new company whose service no one has heard of — let alone thinks they need — can be downright crazy… or brilliant. At the outset, it’s impossible to know which for certain. That was the situation Jamie Shea and Patrick Meyer were in on a November day in 2014 when they launched Chefs Plate.

Chefs Plate aimed to deliver something new, called “meal kits”, to downtown Toronto professionals who were too busy to cook dinner but who probably couldn’t stomach another night of takeout either. Chefs Plate would make dinner easy: fresh, raw, pre-portioned ingredients delivered right to doorsteps. All you had to do was follow the recipe inside and — voila! — a delicious, home-cooked meal in under 30 minutes.

For months that summer and fall, Jamie and Patrick had sweated every detail of their venture. They’d quit their corporate jobs and were living off savings and credit cards. From the first floor of the townhome they shared in Toronto, the two slowly brought Chefs Plate to life. One problem persisted, however: How to gain customers? Meal kits was a new category in Canada. Few had heard of them. With no money for a splashy ad awareness campaign, Jamie and Patrick had to rely on old-fashioned word of mouth. So they reached out on social media to friends, family, co-workers and classmates, suggesting they give the service a try, then waited…

“We thought maybe we’d get 100 orders in our first week,” recalls Jamie. But even that proved too optimistic. Just 17 orders came in. And for the next several months, no more than 20 arrived per week. “It was,” says Jamie, “a pretty humbling experience.”

 Today, however, it’s a different story. Chefs Plate delivers nearly half a million meals a month across Canada. The company operates two distribution centres, in Toronto and Vancouver, and employs 350. With annual revenues of more than $50 million, Chefs Plate says it has the largest share of Canada’s estimated $120-million meal-kit market.

So how did two guys a few years out of business school mange that? And what are they going to do next? Canada’s meal-kit industry is still new, but Jamie and Patrick are bullish, and even see potential to challenge the big grocery chains for customers. “We’re creating a brand here,” says Patrick. “We think we’re in a pretty neat position to grow.”

Before they knew each other, Patrick Meyer and Jamie Shea, both now 28, had at least one thing in common as teenagers: both wanted to attend business school.

For Patrick, raised in the small town of Elmira, in southwestern Ontario, business was a family affair. His grandfather and father ran an import company that sold garden tools and lawn décor to such retailers as hardware stores. After school on many days a young Patrick packed boxes in the warehouse. By high school, he was in the office. “The finance side was what I was interested in.”

Jamie, who grew up in Ottawa, had an older cousin who graduated from Smith. Jamie once visited him in downtown Toronto, where his cousin had landed a job. “He had a nice apartment, a nice car. I loved the idea of business school and the opportunities it opened up.”

At Smith, Jamie and Patrick became fast friends. Eventually they shared a house with four fellow Commerce students. Upon graduation, in 2011, they became roommates again, in Toronto. Patrick had gotten a job at Credit Suisse and Jamie at Cara Foods. But starting a business was never far from their thoughts. Sometimes on lazy Sundays in their apartment, they’d toss around startup ideas. “We had some crazy ones for sure,” laughs Patrick.    

It was Jamie who came up with Chefs Plate. At Cara, he worked on the Harvey’s restaurant business and was learning all about the food industry and food trends. One thing he noticed: the food business, especially grocery, had yet to be disrupted by ecommerce. People still shopped for food the way their grandparents did: via a trip to the supermarket.

Yet, by 2014, cracks in the old model were showing. Startups like UberEats and JustEat were linking hungry consumers with a cornucopia of restaurants. In England, major supermarket chains, such as Tesco and Sainsbury’s, were developing sophisticated ecommerce operations for home delivery. Everywhere, it seemed, people were getting used to the idea of having food brought to them, rather than going to get it.

But it was a Swedish company, Linas Matkasse, that really got Jamie’s attention. Founded in 2008 by brother-sister duo, Niklas Aronsson and Lina Gebäck, Linas Matkasse was among the world’s first meal-kit companies. By around 2012, it was grossing US$45 million a year in a country of fewer than ten million people, according to Forbes.

Jamie figured that if Linas Matkasse were in Canada, he’d be a customer. He was tired of restaurants and takeout. Cooking at home was cheaper and healthier, to be sure, but trips to the grocery store didn’t appeal either. Package sizes were often too large, so food spoiled and got tossed. Then there was the hassle of figuring out what to cook.

Meal kits seemed like a business idea worth pursuing. And Jamie’s background in food and Patrick’s experience in technology with Credit Suisse made them the perfect team. The timing seemed right, too. Patrick had earlier quit Credit Suisse to travel with his girlfriend. By the summer of 2014 he was back in Toronto and looking for his next job. Jamie convinced him to start Chefs Plate instead.

At first, the two friends did everything themselves. Dishes were developed in their kitchen at home and photos for recipe cards were taken on their iPhones. Every Friday, Jamie would pick up ingredients at the supermarket and over the weekend they’d assemble the kits.

“It was very grassroots,” says Patrick, noting that they were funding the entire venture themselves. Their first big purchase was a vacuum-packing machine to seal meat. Not wanting to pay the $100-delivery fee, Jamie decided to pick up the machine himself using his little VW Jetta. “When I got there, they opened up the back of the warehouse, and there was this huge thing on a forklift. There was no way it was going to fit in my car.”

But slowly business picked up and staff were brought aboard. (The first hire, a part-time web developer named Thomas Stevens, is now Chief Technology Officer.) Jamie and Patrick also began to better understand what customers liked and how to gain more of them. They noticed, for instance, that people who subscribed tended to become loyal fans; so they launched a customer-referral program.

By summer 2015, the meal-kit market was bubbling up. In the U.S., another startup, Blue Apron, was attracting attention. Jamie and Patrick secured their first round of financing (they’ve gotten $20 million in four rounds of financing to date) and a partnership with FedEx provided cost-effective shipping. In 2016, Chefs Plate expanded its delivery area from Ontario to Western Canada; last year it moved into Quebec and the Maritimes, too.

Why do Canadians order meal kits? Mostly to save time with dinner ideas, cooking and grocery shopping, according to Nielsen research. Another reason: meal kits are a chance to try new dishes.

To maintain variety in its menu, Chefs Plate has a kitchen in the middle of its headquarters in downtown Toronto in which chefs constantly come up with creations, such as Peruvian Chicken (with crispy potatoes, avocado green sauce and arugula salad) and Ginger Miso Stir-fry (with pearl couscous, mushrooms and lime bok choy). Eleven new recipes are introduced to customers a week, says Jamie. “We basically write a cookbook a month.” Dishes are specifically created with “the home cook in mind,” he adds. “We do five stages of testing. We only use home-grade appliances, so we’re using the same equipment here as our customers would typically at home.”

Customers can subscribe to two-person or family (four-person) plans. The cost: about $10 a serving. Kits with ingredients for up to four dinners are delivered once a week, with ice packs and insulated liners to keep perishables cold. Because ingredients are pre-portioned, Chefs Plate says it’s able to reduce food waste.

Another reason for meal kits’ popularity may have to do with people’s desire to be better cooks. Most of us are no Martha Stewart or Jamie Oliver, but the easy, step-by-step instructions in meal kits give people “a little more confidence in the kitchen,” says Joel Gregoire, food and beverage analyst at research firm Mintel in Toronto.

When Chefs Plate first opened, there was no meal-kit industry in Canada to speak of. Competitors have since popped up. For example, Montreal-based Goodfood, in 2015, and Hello Fresh, a German company, arrived the following year. Technomic, a U.S. research firm, says the global market for meal kits will reach US$10 billion by 2020, up from $1 billion in 2015. That is perhaps a reason grocery chains are eyeing the market. Last year, Canada’s third-largest grocer, Metro Inc., purchased Miss Fresh, a Montreal meal-kit company.

In Canada, the meal-kit industry remains in its infancy. Only four per cent of Canadian consumers have subscribed to a meal kit, says Nielsen research. But of those, 80 per cent keep ordering. As of the third quarter of 2017, Chefs Plate delivered 450,000 meals a month to 76,000 active subscribers. That was up significantly from a year earlier (150,000 meals a month and 25,000 subscribers).

Jamie and Patrick see potential for Chefs Plate to go beyond its core dinner category by expanding into other meal occasions and adding a greater variety of items to its meal kits. Patrick, for instance, points out that in the U.S., some food delivery companies ship snack boxes and ingredients to make smoothies, soups and sundaes.

Chefs Plate has its eye on the supermarket industry, too. Canadian grocers have yet to make a dent online. Only about half a per cent of Canada’s $100-billion-plus grocery trade is through ecommerce, compared to nearly six per cent in the U.K., says research firm IGD. “Ecommerce in Canada isn’t small because consumers aren’t demanding it. It’s because Canadian companies haven’t been innovative in offering it,” says Patrick. Chefs Plate aims to do just that.

Inside company headquarters, Patrick and Jamie’s vision for Chefs Plate is written in big type along an office wall: “To be the leading online food brand in Canada.” Given the speed at which Chefs Plate has grown, that goal hardly seems crazy. Maybe brilliant.